Sun Communities stock rating upgraded by Evercore ISI on strong core business

Investing.com - Sun Communities (NYSE:SUI) received an upgrade from Evercore ISI on Friday, with the firm raising its rating from In Line to Outperform and increasing its price target to $141.00 from $138.00. The new target represents a potential 14% upside from the current price of $122.87, placing it between analysts’ high target of $150 and low target of $126. InvestingPro data shows Sun Communities is a prominent player in the Residential REITs industry with a market capitalization of $15.53 billion.

The upgrade comes amid significant changes at Sun Communities, including the October 1 CEO transition from Gary Shiffman to Charles Young and the February decision to sell its marina business to Blackstone for nearly $5.7 billion. Despite these shifts, Evercore ISI notes that the company’s core manufactured housing and RV business continues to perform well. According to InvestingPro data, while Sun Communities wasn’t profitable over the last twelve months with a diluted EPS of -$0.63, analysts expect the company to return to profitability this year with an EPS forecast of $2.00 for fiscal 2025.

Evercore ISI raised its 2025 FFO estimate from $6.62 to $6.67, placing it at the top of Sun Communities’ revised guidance range, while its 2026 FFO estimate increased from $6.84 to $6.90. The firm also factored in potential share buybacks, with Sun Communities holding over $500 million in unrestricted cash as of September 30. This strong cash position aligns with InvestingPro data showing the company’s liquid assets exceed short-term obligations with a current ratio of 5.04, while operating with a moderate debt level. Sun Communities also boasts a strong dividend history, having raised its dividend for 9 consecutive years and maintained dividend payments for 33 consecutive years, currently yielding 3.39%.

The research firm projects $51.6 million in NOI for Sun Communities’ UK home sales activity in 2025, toward the lower end of the company’s revised range of $50.1 to $56.4 million, with that figure expected to remain flat in 2026 due to offsetting factors in volume and pricing.

While core FFO growth of 3.4% in 2026 might appear modest, Evercore ISI believes it understates Sun Communities’ recurring earnings power, which the firm estimates is closer to 6%, supporting its $141 price target based on a 20x targeted AFFO multiple applied to 2027 estimates.

In other recent news, Sun Communities Inc . reported its second-quarter earnings for 2025, which fell significantly short of analyst expectations. The company’s earnings per share (EPS) were reported at $0.07, a notable miss from the forecasted $1.12, representing a 93.75% shortfall. Revenue also came in slightly below expectations, totaling $697.2 million compared to the anticipated $698.81 million. These recent developments highlight a challenging quarter for Sun Communities, as their financial performance did not meet the projections set by analysts. Despite the earnings miss, the company’s stock experienced a rise in value, although this was not sustained in premarket trading. Investors may want to keep an eye on future reports and analyst assessments for further insights.

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